Learning from Clinton’s Cancer Shelters: How We Give Aid Matters

Lab tests conducted as part of our investigation in Haiti discovered levels of [formaldehyde] in the 6th-grade Clinton Foundation classroom in Léogâne at 250 parts per billion…

Randy Maddalena, a scientist specializing in indoor pollutants at Lawrence Berkeley National Laboratory, characterized [it] as “a very high level” … in “normal” buildings, you’ll see rates 12-25 times lower than 250 parts per billion, “and even that’s considered above regulatory thresholds.”

You should get those kids outta there,” Maddalena said.

That’s from last week’s Nation report on the Clinton Foundation shelters in Haiti. To construct the shelters, Clinton contracted with Clayton Homes. Clayton is currently being sued in the US for building formaldehyde-laced trailers after Hurricane Katrina.

The Clinton Foundation deserves harsh criticism for hiring a company known to build carcinogenic shelters in disaster areas. And while this would be embarrassing for any organization, it’s particularly inexcusable for Clinton. Why? Because this project was the Clinton Foundation’s first contribution to the Interim Haiti Relief Commission, a group Clinton also co-chairs, which exists to “review all projects proposed by Haitian government ministries and donors” to make sure they “fit Haiti’s needs.”

All Aid Isn’t Created Equal

But simply jumping on the Clinton-bashing bandwagon ignores the broader problem: the way our aid system is set up makes this result inevitable.

The story begins with a practice called “tying” aid. Tied aid is aid that has to be used on goods and services from the donor country. The practice is bad for people in poor countries, but great for contractors. As Oxfam puts it, tying aid means “the value [of aid] flows right back to the US.” Unfortunately, as the graph below shows, the US ties nearly all of its aid – far more than any other country.

US "tied aid" practices compared to those of other countries. Source: Organization of Economic Cooperation and Development 2006 aid monitoring report.

Getting What We Pay For: Analyzing Earthquake Relief

Tying aid doesn’t just make aid ineffective, it often makes it harmful. Consider the US earthquake relief effort. 88% of all earthquake relief for Haiti went to one of three sources¹:

  • Donors’ own civil and military entities (e.g. hiring our own soldiers to send down),
  • Private contractors, and
  • The UN and its partner NGOs.

That means our aid went to sending 22,000 US soldiers who were widely criticized for getting in the way of relief efforts. It means our aid went to companies like Chemonics and Monsanto, whose damaging work we’ve already discussed, and Clayton Homes. And it means our aid went to support a UN occupation force hated by Haitians.

It’s easy to decry each individual instance of misconduct. Chemonics, Monsanto, Clayton Homes, and the hostile, occasionally thuggish UN forces in Haiti all make for easy targets. But the real question is this: why does our aid system funnel money to groups whose work range from ineffective to actively harmful?

Designed to Fail: How Old Laws and New Lobbies Ruin Aid

The Origin of USAID

The Foreign Assistance Act of 1961 (FAA) established USAID and still shapes foreign aid today. As Connie Veillette explains in a recent podcast on food aid, the FAA was “designed to create a domestic constituency for our international programs.” In short, lawmakers wanted a law that benefitted US business so those companies would support using foreign assistance as a tool for US foreign policy.

The FAA secured that support, in part, by enshrining aid-tying in the law that created USAID. It further gained support by promising to continue harmful practices such as those established by the Cargo Preference Act of 1931. This act mandates that food aid – a multi-million dollar industry in the US – be shipped on US-flagged vessels at much greater cost.

It has long been known that laws like these lead to huge inefficiencies in the aid system. But as the Clayton Homes debacle illustrates, structuring aid laws in this fashion means our “aid” may help US business interests at the expense of people in countries like Haiti.

Lobbyists Leap to Defend the System

The new USAID Director, Raj Shah, has prioritized strengthening USAID’s ability to partner with local groups. That would mean giving more money to Haitian non-profits and local government rather than multi-national corporations.

Unsurprisingly, this scared the DC contractors, who responded by forming the “Coalition of International Development Companies (CIDC).” Led by companies like Chemonics, who sits on its board, CIDC’s goal is simple: prevent the aid system from changing.

Specifically, their goal is to lobby Congress to make sure USAID money continues going to contractors rather than to local organizations through grants.

Choosing the Right System: Go Local

Even if they have the best intentions, DC-based multi-nationals shouldn’t be in charge of implementing aid projects. These contractors don’t have local knowledge, meaning their ideas are often inappropriate for the local context.

More importantly, they aren’t accountable to Haitians.  Contractors receive no-bid contracts, get paid up-front, and work in a disaster zone for a few years before moving on. Whether or not their work is effective doesn’t affect their bottom line. For instance, USAID sent Chemonics and Development Alternatives, Inc. to Haiti despite the fact that USAID’s own assessment found that they failed to fulfill their objectives last time we hired them.

The Haiti Justice Alliance has previously called for supporting local, community-based groups rather than contractors. This approach is a fundamental part of our model. The news of the Clinton Foundation building carcinogenic shelters in Haiti simply illustrates the urgency of these calls. It doesn’t matter how much we give if our money goes to keeping DC contractors afloat rather than to helping empower Haitian efforts.

¹ See p. 15 of Paul Farmer’s report, released last month, entitled “Has Aid to Haiti Changed?

6 Responses to Learning from Clinton’s Cancer Shelters: How We Give Aid Matters

  1. Dave Algoso says:

    Nathan, great post. You took the issues that my post talked about in general terms and illustrated how they’ve played out in relation to Haiti.

    One aspect of the USAID reforms to keep in mind is that many of the same people will remain involved. That is, if USAID decides to give grants/contracts to local Haitian organizations rather than international development contractors, USAID will need to hire people to manage relationships with those local partners. In some ways, big contractors have been a way of out-sourcing that relationship management function. If USAID starts giving the grants/contracts directly to local orgs, it will probably hire the same people who would have otherwise landed jobs with the big contractors. Same people involved.

    But! Personally, I’m hopeful that the new structures and channels will enable those same people (now with USAID businesscards rather than Chemonics cards) to be more responsive to their local partners. Just something to keep in mind as we (hopefully) see USAID’s practices change.

    • Nathan Yaffe says:

      Mr. Algoso,

      Thanks for taking the time to comment, and for covering the CDIC and contract vs. grant topic in the first place. In my experience, people who write on development issues using a justice lens occasionally run the risk of over-simplifying issues (particularly in an us vs. them sense). So, I was excited to get your feedback because you’re incredibly knowledgeable about these issues. We strive to employ a strong justice perspective, yet still approach these nitty-gritty issues with a sophisticated level of analysis. I figured you could keep me honest if I had strayed in this instance.

      Thanks again,

  2. […] likely answer can be found in our recent post on aid tying: food and military aid are two of the primary ways the US ties its […]

  3. […] It’s impossible to say with certainty why the US allocated funds to the UN as it did. However, by under-funding resettlement while pouring money into the inefficient and potentially harmful food aid system, the US leaves itself open to questions about whether our aid was based on Haiti’s needs or its own. […]

  4. […] about US post-quake aid choices. Before that, we wrote on how some of USAID’s worst practices are artifacts of decades-old laws such as the Cargo Preference Act of 1931 and the widely criticized Foreign Assistance Act of […]

  5. […] Well With: HJA’s two pieces that focus on the effect of tied aid contracts and “indefinite quantity contracts” (IQCs), which are used because they’re administratively […]

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